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Knowledge of options

Call options and put options
There are two types of options: Call and Put
Call options give the option buyer the right to buy the underlying asset at a specific price and give the option seller the obligation to sell the underlying asset at a specific price.
Put options give the option buyer the right to sell the underlying asset at a specific price and give the option seller the obligation to buy the underlying asset at a specific price.

Premiums
A premium is the amount paid by the buyer of an option to the seller. For example, an option contract represents 100 shares of the corresponding stock, and the premium of an option contract quoted at $1.00 is $100.00.  

Strike Price
The strike price is the pre-agreed exercise price.
For call options, the option will be exercised when the underlying asset price is higher than the strike price

For put options, the option will be exercised when the underlying asset price is lower than the strike price

Value status
In-the-money options: If the option is in exercisable status, it is an in-the-money option. For call options, an in-the-money option is when the market price of the underlying asset exceeds the strike price. For put options, an in-the-money option is when the market price of the target asset is lower than the strike price. Option buyers want option contracts to become in-the-money.If there are not enough funds or positions in the account to exercise the option after the market closed, the option position will not have any value.

At-the-money option: When the market price of the underlying asset is equal to the strike price, the value status of the option is equivalent.

Out-of-the-money options: When the option is not worth exercising, the option status is out-of-the-money. Option sellers want option contracts to be out of the money.

The option is out-of-the-money or at-the-money on the expiration date, the expired option will have no value and there will be no exercise taking place.


Typically, options are traded from 9:30 a.m. to 4:00 p.m. EST. However, some option contracts have extended trading hours to 4:15 p.m. EST.

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